Measurement: The Second Generation

The measurement economists met inCambridge,Mass., last week, or at least many of the best of them. Interesting as they were, some of their deliberations had the aspects of stars fulfilling their appointed functions in the heavens.

Members of the Conference on Research in Income and Wealth, founded in 1936 by Simon Kuznets and others, met and discussed a series of papers. So did the executive council of the International Association for Research on Income and Wealth, founded in 1947, by Richard Stone and others. Their sessions operated under the auspices of the National Bureau of Economic Research, itself founded in 1920 to gather facts and search for patterns.

Federal Reserve chairman Ben Bernanke blessed the opening of the joint meeting with a recorded message; Lawrence Summers, of Harvard University, spoke of “the great system of scientific instruments” that measurement economists were forging. The occasion was a memorial dinner for his father, Robert Summers, of the University of Pennsylvania, who died earlier this year.

The elder Summers had, with Penn colleague and research partner Alan Heston, devised and, for a time, collected on his own, a series of international price comparisons (“purchasing power parity”) that afford a much clearer picture of international wealth than traditional comparisons based on currency exchange rates.

In three days of meetings, researchers discussed their plans for extended investigations of income distribution; of non-market activity (such as bearing and caring for children); of the payoff to education and training; of the quality of health care; of general well-being; and of overall sustainability of economic life as we know it – all measurements designed to provide the warp and woof of political debate and policy-making. This is normal science, going forward smoothly within well-established traditions.

Elsewhere the formulators of measurement technologies slightly more disruptive of customary ways met to discuss issues they are facing. At Harvard’s Kennedy School of Government, for instance, the Second World Klems Conference unfolded, designed to coincide with the NBER proceedings. Many participants attended both. KLEMS is an unlovely acronym for capital (K in standard notation), labor, energy, material and services: the five inputs, in other words, that particular industries combine to produce the output collectively known as gross national product. A faint hint of gunpowder hung over the proceedings.

The KLEMS database is the latest attempt to seamlessly merge at the industry level an approach known as growth accounting with the system of national accounts that has evolved from beginnings devised more than half a century ago by Kuznets and Stone. Much growth accounting today stems from work Zvi Griliches and Dale Jorgenson began in the early 1960s Both were young economists then, called to Harvard (Griliches from the University of Chicago, Jorgenson from the University of California at Berkeley) because of their interest in the measurement of productivity.

Almost immediately, they began a long-running argument with Robert Solow, of the Massachusetts Institute of Technology, and Edward Denison, of the Brookings Institution, about the measurement of the factors that contribute to economic growth. Griliches died in 1999. Jorgenson, who found new life measuring the impact of the computer, has barely slowed down.

The KLEMS project, launched in Europe in 2003 (and nicely described in 2010 by Marcel Timmer and others in Economic Growth in Europe: A Comparative Industry Perspective), has expanded to include Asia and Latin America. Earlier this year the US rolled out KLEMS-style integrated productions accounts for US industries. Corporations remain strongly supportive. Martin Fleming, chief economist and strategist for IBM, put it in a nutshell: The World KLEMS initiative has “very creatively built a supply-side capability… [with] a level of level of detail that has never existed before” — a high-resolution lens.

But in an era of budgetary stringency, government funding for the projects that seek to identify and patch together data from various industries is scarce. The next KLEMS meeting will take place in Tokyo. At least the project has found a home at the University of Groningen, in the Netherlands, where the late Angus Maddison held forth for thirty years.

A second disruptive technology didn’t even bother to come to town last week. The Climate Change Impacts and Integrated Assessment Workshop, of Stanford University’s Energy Modeling Forum, concluded its annual meeting earlier this month, in Snowmass, Colorado. The lead economists there, among the chemists, physicists, biologists, geologists, ecologists, agronomists, climatologists, and engineers of every description, is William Nordhaus, of Yale University, who has pioneered the integration of climatic and economic modeling and measurement since his first venture in “green accounting,” in 1972.

Both KLEMS and CCA/IA exhibit the unmistakable urgency of projects central to the present age. But working on economy measurement is no way to become a household word at a young age. Nordhaus is slated for the incoming presidency of the American Economic Association, (meaning he will organize its meetings in Philadelphia in January 2014) and give a presidential address the following year. Jorgenson gave his in 2000. But professional honors are no substitute for detailed narrative in this media-saturated world. Only full-blown scientific biographies will give these pioneers and the communities they have created their due.

The Internet… reaffirms the basic free market critique of big government. Here for thirty years the government has an immensely useful protocol for transferring information, TCP/IP, but it languished… In less than a decade, private concerns have taken that protocol and created one of the most important technological revolutions of the decade.

I did this because Gordon Crovitz, “Information Age” columnist of The Wall Street Journal (and former WSJ publisher) misattributed the remark to Cowen in a column he wrote (“Who Really Invented the Internet”), and then, inexplicably, didn’t correct his error the next week in a second column (“WeHelpedBuildThat.com”) about the “hornet’s nest” he had stirred up with the first.

Instead, Crovitz quietly expunged Cowen’s name from the database and substituted the name of the real author of the quote, a blogger, Brian Carnell. This line was added to the digital record: (Note: This column has been altered to correct the misattribution of Brian Carnell’s quote.)

It is too much, I think, to hope that Crovitz will explain himself to readers in a future column. But I’d like to think that the editor of the WSJ will spell out to staffers his corrections policy – and perhaps to readers as well.